Pound sterling steadies after suffering worst day in months on narrowing election polls

The pound fell about 2 per cent last week and suffered its worst day on Friday since February

The currency remains about 13 per cent lower against the dollar since last June’s Brexit referendum (iStock)

The pound inched higher in thin trading on Monday, recovering somewhat from its worst day since February on Friday after opinion polls showed Labour catching up with the Tories ahead of next month’s election.

In muted trading, due to the bank holiday, the pound was at about $1.2840 against the US dollar.

It fell around 2 per cent last week according to data from Thomson Reuters, as polls showed the Conservatives’ lead over the Labour Party had shrunk from as much as 20 points in April.

The currency remains about 13 per cent lower against the dollar since last June’s Brexit referendum, but has been edging tentatively higher this year.

It rallied sharply after Theresa May’s 18 April announcement of a general election, with investors hopeful that a vote would strengthen the Prime Minister’s hand in Brexit negotiations. But the recent polls indicate that while a Conservative victory still looks most likely, the landslide originally expected is less certain.

Polls in the Sunday newspapers gave the Tories a lead of between six and 14 points.

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The surveys found support for Tories ranging between 43 per cent and 46 per cent and for Labour between 32 per cent and 38 per cent. Liberal Democrats trailed with support of between 7 and 9 per cent.

Ms May suffered an opinion poll slip after she U-turned on proposals for a “dementia tax”.